ACIT CIR 7(3), MUMBAI V. TECHNOVA IMAGING SYSTEMS P. LTD, MUMBAI

ITA 952/MUM/2010

• Counselvise Citation: 95219914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 30-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 05-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D SONGATE
• Assessee Lawyers: ANKIT AGARWAL
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI P.M. JAGTAP (AM) AND SMT. ASHA VIJAYAR AGHAVAN, JM I.T.A.NOS.952 & 953/MUM/2010 ASSESSMENT YEARS: 2002-03 & 2004-05 THE ASST. COMMISSIONER OF INCOME- TAX, CIRCLE-7(3), 28 TH FLOOR, CENTRE-1, WORLD TRADE CENTRE, CUFFE PARADE, MUMBAI 400 005. VS. M/S. TECHNOVA IMAGING SYSTEMS PVT. LTD., LAXMI MILLS ESTATE, OFF. DR. E. MOSES ROAD, MAHALAXMI, MUMBAI 400 011 PAN: AAACT 2165 J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D. SONGATE RESPONDENT BY : SHRI ANKIT AGARWAL O R D E R PER P.M. JAGTAP, AM: THESE APPEALS ARE PREFERRED BY THE REVENUE AGAINST TWO SEPARATE ORDERS PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX ( APPEALS)-13, MUMBAI, BOTH DATED 27.10.2009 FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 AND SINCE COMMON ISSUE IS INVOLVED THEREIN, THE SAME HAVE BEE N HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS SINGLE CONSOLIDATED ORDER. 2. THE SOLITARY COMMON ISSUE ARISING OUT OF THESE T WO APPEALS RELATES TO THE ALLOWABILITY OF ASSESSEES CLAIM FOR DEDUCTION UND ER SECTION 80HHC IN RESPECT OF DEPB RECEIPTS. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF IMAGING PR ODUCTS. THE RETURNS OF INCOME FOR THE YEARS UNDER CONSIDERATION WERE FILED BY IT DECLARING TOTAL INCOME OF RS. 10,78,82,764/- AND RS. 6,70,01,326/- FOR THE ASSESS MENT YEARS 2003-04 AND 2004- 05 RESPECTIVELY. IN THE SAID RETURNS, EXPORT INCEN TIVES IN THE FORM OF SALE OF DEPB LICENSE AMOUNTING TO RS. 3,04,02,052/- AND RS.3,69, 50,278/- WERE TAKEN INTO CONSIDERATION BY THE ASSESSEE FOR THE PURPOSE OF CO MPUTING DEDUCTION U/S.80HHC BEING THE INCOME IN THE NATURE COVERED UNDER SECTIO N 28(IIIA), 28(IIIB) AND 28(IIIC). ACCORDING TO THE ASSESSING OFFICER, THE SAID AMOUN TS WERE COVERED BY CALUSE (IIID) ITA NO.952 & 953/M/2010 TECHNOVA IMAGING SYSTEMS P.LTD. 2 AND (IIIE) OF SECTION 28 IN VIEW OF THE CLARIFICATI ON MADE BY THE TAXATION LAWS (AMENDMENT) ACT, 2005. HE HELD THAT AS PER THE SAI D AMENDMENT, THE ASSESSEE HAVING EXPORT TURN OVER EXCEEDING RS. 10 CRORES WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC TO THE EXTENT OF 90% OF THE SUM REFER RED TO IN CLAUSE (IIID) OF SECTION 28 ON PRO-RATA BASIS ONLY IF NECESSARY AND SUFFICIE NT EVIDENCE IS PRODUCED TO PROVE THAT HE HAD AN OPTION TO CHOOSE BETWEEN THE DUTY DR AW BACK OR DEPB AND THE RATE OF DRAW BACK CREDIT ATTRIBUTABLE TO THE CUSTOM DUTY WAS HIGHER THAN THE RATE OF CREDIT ALLOWABLE UNDER DEPB SCHEME. SINCE NO SUCH EVIDENCE WAS PRODUCED BY THE ASSESSEE, HE HELD THAT THE ASSESSEE WAS NOT ENTITLE D FOR DEDUCTION U/S.80HHC IN RESPECT OF THE AMOUNTS RECEIVED BY IT ON ACCOUNT OF SALE OF DEPB LICENSE. ACCORDINGLY, THE CLAIM OF THE ASSESSEE FOR DEDUCTI ON U/S.80HHC WAS RESTRICTED BY HIM IN THE ASSESSMENTS COMPLETED FOR BOTH THE YEARS UNDER CONSIDERATION. 4. ON APPEAL, THE LEARNED CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80HHC IN RESPECT OF DEPB RECEIPTS REL YING ON THE DECISION OF THE MUMBAI BENCH OF THE I.T.A.T IN THE CASE OF TOPMAN E XPORTS V. ITO (318 ITR (AT)87 (SB)(BOM.), WHEREIN IT WAS HELD THAT THE FACE VALUE OF DEPB BEING COVERED BY CLAUSE (IIIB) OF SECTION 28, THE SAME WAS ELIGIBLE TO BE T AKEN INTO CONSIDERATION FOR COMPUTING THE DEDUCTION U/S.80HHC. AGGRIEVED BY THE ORDERS OF THE LEARNED CIT(A), THE REVENUE HAS PREFERRED THESE APPEALS BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, THE ASSESSEE H AS MOVED AN APPLICATION SEEKING ADJOURNMENT. HOWEVER, KEEPING IN VIEW THAT THE SOLITARY ISSUE INVOLVED IN THESE APPEALS IS SQUARELY COVERED BY THE DECISION O F THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. KALPATARU COLOURS AND CHEMIC ALS, REPORTED IN 192 TAXMAN 435, THE REQUEST OF THE ASSESSEE FOR ADJOURNMENT HAS NOT BEEN ACCEDED TO AND THESE APPEALS OF THE REVENUE ARE BEING DISPOSED OF EX PA RTE QUA THE RESPONDENT ASSESSEE ON MERITS. AS HELD BY THE HONBLE BOMBAY HIGH COU RT IN THE SAID CASE, THERE WOULD BE NO JUSTIFICATION TO TREAT THE AMOUNT WHICH IS RE CEIVED BY AN EXPORTER ON THE ITA NO.952 & 953/M/2010 TECHNOVA IMAGING SYSTEMS P.LTD. 3 TRANSFER OF DEPB CREDIT DIFFERENTLY THAN THE PROFIT S WHICH ARE MADE ON THE SALE OF IMPORT LICENSE. IT WAS HELD THAT BOTH THESE AMOUNT S WOULD HAVE TO BE TREATED AS PROFITS OF BUSINESS UNDER CLAUSE (IIID). IT WAS FU RTHER HELD THAT AS PER THE AMENDMENT MADE BY THE FINANCE ACT, 2005, IN THE CAS E OF ASSESSEE HAVING EXPORT TURNOVER EXCEEDING RS. 10 CRORES, THE PROFITS COMPU TED U/S.80HHC(III) SHALL BE INCREASED BY 90% OF THE SUM REFERRED TO SECTION 28( IIID) SUBJECT TO TWO CONDITIONS STATED THEREIN. RESPECTFULLY FOLLOWING THE SAID DE CISION OF THE HONBLE JURISDICTIONAL HIGH COURT, WE SET ASIDE THE IMPUGNED ORDERS OF THE LEARNED CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE FOR BOTH THE YEARS UNDER CONSIDERATION AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICE WITH A D IRECTION TO RECOMPUTE THE DEDUCTION ALLOWABLE TO THE ASSESSEE U/S.80HHC KEEPING IN VIE W THE SAID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF APRIL, 2011. SD. SD. (ASHA VIJAYARAGHAVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED THE 27 TH APRIL, 2011. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT-7, MUMBAI. 4. THE CIT(A)-13, MUMBAI 5. THE DR E BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI